This is another unavoidable lesson. Banking has not been reformed by actions taken by the state, central banks or regulators since the crisis. Indeed they have set back the prospects for improvement.

There were two main strands in the policy response to the crisis. One was monetary policy – the experiment in QE, discussed in Lessons 1-3. The other was regulatory.

Banking industry leaders have resisted all efforts to reform. That shows that in the current state of society, banking can be regulated – raising costs to society – but not restructured.

Fundamental restructuring would involve making bankers personally liable for gross mistakes, crimes and misdemeanours – actions that brought the bank into disrepute as well as narrow defined criminal liability.

The chances of this happening are vanishingly small.

In the US, the Trump administration is proposing measures that might well dilute such reforms as are being tried, as in these proposals . To quote one recent verdict:

“The bottom line: only eight years after the end of the worst financial crisis since the Great Depression, the US Treasury has shifted from becoming a leading proponent for enhancing the resilience of the global financial system to an advocate for the private interests of a few financial behemoths in the name of boosting growth.” (Cecchetti and Schoenholtz, 2017)

Existing policies distorting the financial system, such as tax incentives favouring debt over equity finance, remain in place. Indeed, policies have raised consumer debt further while sovereign debt has continued to rise at unsustainable rates.

I know capital ratios have been raised, but do they make banks safer? The reassurances given by regulators should be treated with due caution. In my view, these regulations and burdens not only raise costs and thus prices to customers but also make it more difficult to see how banks can ever get back to being solid, reliable pillars of the system that they were before they became pure marketing organisations and were infected by the doctrine of “shareholder value” – which ended up destroying their value.

The stress tests are not worth the paper they are written on. Their only purpose is to reassure the public.

Everywhere, banks are in receipt of vast implicit public subsidies. The deadweight cost of the state backstop in the next crisis is unknowable and, essentially, open-ended.

Reform can only can come within

Banking and finance can be reformed only from within. I feel sorry for the hundreds of thousands of honourable people working in financial services. They remain the industry’s only hope. But their hopes of making their institutions serve genuine customers’ needs are put further away from ever being achieved when the state and its agents replace ethics and honour by regulation and the mathematics of capital ratios and leverage controls, “fit persons” regimes and all the other rules made by the busy-bodies who populate financial regulators.

Public officials can never, ever understand how business works. Either financial services are nationalised and run by boards of civil servants or they are set free. Given a truly competitive environment in which executives are personally liable for mistakes and in which institutions (including the largest) can and do fail – then we will have at least have one of the anchors of a sound system of money.